Showing posts with label branding. Show all posts
Showing posts with label branding. Show all posts

How Prices are Changing in Your Grocery Store, and Why This One Frugality Hack No Longer Works

Something has changed in the grocery store pricing environment. And it's not just prices rising (which they are, across the board in almost all food categories).

What we're also seeing is a fundamental change in the way things are priced relative to each other, and it's ruining one of the key grocery store hacks frugal shoppers have used for years.

What's the fundamental change? It used to be that store-brand products always sold at meaningful discounts to branded products. Not any more. And so, one of the easiest ways to save money food shopping--switching from the branded to the generic product--no longer works as well as it used to.

The backstory
Consumers were a lot better behaved twenty years ago. They didn't change brands often. So, to induce the typical consumer to even consider buying a store brand or generic product, the store had to offer a really juicy price. The price discount had to be huge.

Remember, this was back when companies actually made things, and when there (sometimes) used to be an actual difference between branded and unbranded products. Not so much any more. Furthermore, if you've read any of Casual Kitchen's posts on branding, you're well aware that, today, many consumer products brands don't actually make the products they're known for. They instead outsource it to other third party food manufacturers.

Not only that, but often those third party manufacturers make not only the branded item, but the store brand product too. Often in the very same factory. And those two products sit right next to each other on the store shelf, differentiated by absolutely nothing but price. [For a depressing and highly typical example, see CK's article on commodity canned tuna.]

Consumers, especially the ones who didn't enjoy getting separated from their money for no reason, caught on to this game. They stopped playing checkers and started playing chess. When you figure out to your dismay that the only difference between a branded product and a store brand product is a label and a 30-50% higher price, you won't just consider the store brand, you'll buy it. From now on. What kind of fool would do otherwise?

Add in some inflation
There's one more step in this discussion. We're now in a more inflationary environment than we were just a few years ago. Prices are starting to rise across many grocery store categories. But here's what's unusual in today's pricing environment: while many branded products have hiked their prices, store brands have hiked their prices even more. Now, the pricing differential between branded and generic items is a lot smaller than it was. Instead of discounts of 30% or more, you might see discounts of as little as 5-10%.

I'll share an example. Over the past couple of years, Planters brand nuts has put in meaningful price hikes to the point where (in grocery stores in our area) their standard 1-lb jar of peanuts now costs up to $4.29. The store brand in my store responded to this "pricing umbella" by raising their standard price to $3.99, a mere 7% discount. Yes, both have raised prices, but the store brand raised its price more, and now the store band offers far less of a discount to the branded product than before.

Another example. Store brand analgesics (aspirin, ibuprofen, acetaminophen) now are priced at a smaller than ever discount to branded analgesics, with discounts of only 10-15%. Previously you could buy store brand painkillers for sometimes half the price of branded Tylenol or Advil. And because these products have to be identical in every way by law, this was the easiest, most entry-level frugality hack in all of consumer products.

As a matter of fact, with some products, the generic/branded pricing differential has gotten so tiny that you can sometimes find a branded product offered at a temporary "on-sale" price that's actually less than the store brand product! Grocery store reality seems totally upside down when this happens. More on this in two paragraphs.

You can only push consumers so far
Finally, you can only push prices so far before consumers push back. In many food categories, companies and grocery stores are discovering to their dismay that they hurt sales by ramming through big price hikes, as consumers adjust by finding substitutes or buying less. Then, to win those buyers back, consumer products companies rely on discounting, sales and couponing.

Here's a somewhat ludicrous example of this from the packaged cookie aisle: after years and years of price hikes and stealth price hikes (keeping the price the same but offering fewer cookies per box, one of the most annoying tactics out there), it feels ridiculous to pay $6.00 or more for a box of some 17 Oreo DoubleStuff cookies, a quantity of cookies I could easily inhale in one sitting. Apparently many consumers agree with me (maybe not about the inhaling part, but definitely about the price), and in my grocery store, these cookies are frequently offered at half off. Half!

So, let me offer readers a thought experiment. What really is the price of Oreos?

Obviously, for a non-savvy, non-flexible customer who must have her Oreos on the exact day she happens to shop… that day's price is the price, however high it happens to be.

For the rest of us, however, we easily defeat these pricing games by shopping opportunistically, and never paying full price for anything, ever. Ever! Unless something is offered at a highly desirable, on-sale price, we. don't. buy. Here's where a savvy consumer separates herself from the pack.

Or! An even savvier, self-reliant consumer can always use the Don't want it! technique and not buy Oreos at all. After all, a batch of homemade cookies--made with love from laughably cheap commodity pantry items--will taste far better and cost far less.

And because learning to make delicious food at home is an inherently good skill, and because working on this skill improves your independence, flexibility and self-sufficiency, doing so will bring you far more satisfaction than overpaying for some flimsy, pathetic plastic container of 17 lousy Oreos.

So what's the takeaway here? First, all of this goes to show, yet again, who has ultimate power in this business environment. We consumers do. We are the ones who willingly decide whether or not to pick the product up off the shelf, carry it over to the checkout counter, and fish money out of our pockets to pay. By definition, companies cannot sell us products at any price unless they offer sufficient value to us such that we decide to buy.

The minute we say no and don't buy... they start discounting. Then we buy.

The consumer products marketplace is changing, it's evolving, as companies seek ways to maintain their profitability in an increasingly uncertain retailing environment. Some of our favorite frugality techniques still work, but some aren't working quite as well as they used to. We have to stay flexible, independent and opportunistic.


READ NEXT: Why Bad Blogs Get More Readers (An Accidental, Secret Recipe for Massive Web Traffic)
AND: Nine Terrible Ways to Make Choices

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Where Brands (and Pseudo-knowledge) Go to Die

Readers, I wanted to share the following quote--although not for the reasons you might think:

"More students can identify Mr. Peanut and Joe Camel than can identify Abe Lincoln or Eleanor Roosevelt. They can identify twenty different kinds of cold cereal, but not the trees and birds in their neighborhood."
--Mary Pipher, The Shelter of Each Other

This author's point (and on one level she's right) is that people know far more about brands and consumer products than they know about things that actually matter. Worse, we ingest this consumer product knowledge passively. It's deftly inserted into our minds by the media and advertising all around us.

On another level, however, this is one of those fist-shaking "kids these days" quotes every generation hears from its elders and betters. My generation heard this type of crap argument too: One of my favorite "kids these days" media narratives was those articles citing "studies" of how American kids of my generation were terrible in math (or science, or geography, or whatever) compared to Japanese kids. You can see how the media reflects our society's fears back at us: back in the 1970s and 1980s everybody was afraid the Japanese were going to kick our asses in everything and take over the world. Today, kids probably get to hear how academically pathetic they are compared to Indian kids, or Chinese kids. Probably both.

That's why reading quotes like these--reading them on a literal level, that is--often just makes you dumber. (Although note that meta-reading quotes like these may give you useful hints for which country's economy and stock market will collapse in the next decade.)

How long does psuedo-knowledge live?
But the real reason this quote grabbed me was in the way is shows, entirely unintentionally, how incredibly rapidly knowledge (really, pseudo-knowledge) about brands and consumer products becomes totally useless and obsolete.

Mary Pipher's book was first published in 1996, not that long ago. But already her brand references are unrecognizable to young people today. The first thought from someone under age twenty will likely be "What the heck is a Mr. Peanut?" [1] With Joe Camel, it's even worse: since cigarettes haven't been advertised in a generation, nobody young knows or even cares who Joe Camel is today.

And yet Joe Camel seemed like such a big deal in the 1980s and 1990s. Finger-wagging pundits back then were panic-stricken that millions of innocent children would fatally take up smoking because of this friendly cartoon mascot. [2]

There's one more irony, however, and it's the best of all. Today, Mary Pipher's quote is exactly wrong, and for reasons she'd never imagine. Far, far more kids today can identify Abe Lincoln and Eleanor Roosevelt than Mr. Peanut and Joe Camel, because nobody young has ever heard of Mr. Peanut or Joe Camel! So I guess that's pretty good.

With a few notable exceptions, the brands and mascots of prior generations have absolutely zero presence in the minds of the generations behind us. Upcoming generations have enough new pseudo-knowledge of their own: new brands, new products, new shows, media, and advertising mascots all deftly inserted into their brains. And in another few decades we'll collectively forget it all, all over again, and learn still more new crap. The pseudo-knowledge never ends, it just changes.

Thus there's a key difference between knowledge and pseudo-knowledge. One is stable, the other is in a constant state of change, always evolving. Trees, birds and major historical figures don't change; cereal brands and peanut mascots do. You'd think we'd find more value in learning the former versus the latter, but each generation, mine included, always seems to learn the pseudo-knowledge rather than the real thing.


READ NEXT: Is "Meet or Beat" Pricing Anti-Consumer?
AND: Rebellion Practice

Footnotes:
[1] And yet, weirdly, Wikipedia calls Mr. Peanut "one of the best known icons in advertising history." If anything, this just shows how quickly and fully each generation forgets the prior generation's pseudo-knowledge, while it labors to create (and waste time learning) its own.

[2] Totally unrelated sidenote: Many finger-waggers back then were also convinced, Freudian-like, that Joe Camel's face looked just like a penis. Sadly, once someone tells you this and you Google the image, you can never unsee it. Thanks, finger-waggers.



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You can help support the work I do here at Casual Kitchen by visiting Amazon via any link on this site. Amazon pays a small commission to me based on whatever purchase you make on that visit, and it's at no extra cost to you. Thank you!

And, if you are interested at all in cryptocurrencies, yet another way you can help support my work here is to use this link to open up your own cryptocurrency account at Coinbase. I will receive a small affiliate commission with each opened account. Once again, thank you for your support!

"Women's Vitamins"

Readers, see the following embarrassingly amateurish photo, and tell me: what do you think might be the difference between these two types of vitamins?


Well, one is branded--by Bayer, one of the most trusted brands in the healthcare and pharmaceutical industry. The other isn't.

One is a "women's formula" and offers consumers "bone and breast health support." The other, with its more modest and plausible claims of being "gluten free" and offering "daily well being," doesn't make me laugh quite as hysterically.

Granted, the branded vitamin contains calcium and a few bonus obscure minerals, all of which you already get in sufficient amounts from a normal diet:

Branded

Unbranded

Let's face it: these two bottles of vitamin tablets are virtually identical. And given recent research on vitamins, neither will likely make any difference to your health.

The only distinction: one costs about three times as much per tablet.

Now, you might rationalize this price differential by arguing that the "untrustworthy" generic vitamin was probably manufactured in some horrible Chinese sweatshop by exploited, underpaid workers who secretly added extra lead and mercury to each pill. And of course the "trustworthy" brand was surely manufactured by people who care, who really care about you, and would never outsource manufacturing to anybody.

Feel free to think this if it makes you feel better. But the rest of the readers here at Casual Kitchen know that a brand signifies nothing about who makes, packages, or formulates the product inside. Nothing.

The only difference is the cost premium of the branded product, paid by you and received by them in the form of excess profit. And... the pill's bigger.



READ NEXT: How to Own the Consumer Products Industry--And I Mean Literally Own It

And: Consumer Empowerment: How To Self-Fund Your Consumer Products Purchases


Food vs Feed

The other day I was wandering from blog to blog and I stumbled onto an interesting concept: the idea of "food" versus "feed."

It was here, at an unusual blog that covers a range of topics, most of which have nothing to do with the content here at Casual Kitchen. But this blogger's idea of thinking of the food industry's processed, packaged and shelf-stabilized food products as "feed"... I mean, it's a just an excellent metaphor, a really useful lens to think about the kinds of food I want to avoid.

According to this blogger:

"Soda, chips, candy, cookies, crackers, cakes, pastries, frozen meals, microwavable fare and most fast food and chain restaurant gross national products all qualify as FEED...

Food is grown, raised, harvested and processed--and if not consumed while fresh--preserved in as natural and organic a state as possible to keep most of its nutritious and nourishing qualities intact.

Feed is mass produced by a few large multinational corporations using bio-technological innovations to quickly and efficiently manufacture product units ready for global distribution and a near infinite shelf life. Its primary traits are using genetically modified grain products to create a marketable product that is usually adulterated with preservatives and flavor enhancements designed in a laboratory to stimulate the taste buds to fool the human body into thinking it's something good for you."

Former FDA Commissioner David Kessler, author of The End of Overeating, couldn't say it better.

Here at Casual Kitchen, we use the term second-order foods to describe packaged and processed foods-made-from-other-foods. But the word "feed," with its overtones of factory farming, of the literal fattening up of human beings... it's a far more interesting and rhetorically powerful word. And using this word, thinking about food in this way, it helps put extra power and agency back into consumers' hands. After all, we're not barnyard animals. Who wants to eat feed?

Finally, one more quote relevant our many discussions about branding here at Casual Kitchen:

But above all, the primary difference between Food and Feed can be discerned by this: most real food requires little (if any) corporate mass media marketing campaigns to sell product and expand market shares and waistlines alike.

In other words, branding and advertising is a key cue to distinguish food from feed. It's not always the case, but in general, if a food needs to be advertised and marketed to you, you don't want to eat it.


READ NEXT: The Do-Nothing Brand
And: All-Time Best Articles on Branding, Advertising and Consumer Psychology [ARCHIVE]

How To (Not?) Be Manipulated By a Brand

For the next couple of weeks I'll be featuring some notable articles from Casual Kitchen's archives. I'm taking a brief break from writing to do a French language immersion in Quebec.

Once again, thank you for supporting my work.

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How To Be Manipulated By a Brand

There's an important tautology in the world of consumer branding that I was never able to put into words until now:

If you know a brand is trying to manipulate you, it completely loses its ability to manipulate you.

I know, I know. On some level it sounds obvious. But there's more than meets the eye to this sentence. What it really means is this: you can only be manipulated by branding if you're totally unaware that you're being manipulated. Or if you believe you're immune.

And yet almost all consumers sincerely believe they are immune to branding. I mean, it's kind of intellectually insulting to think otherwise, isn't it? Nobody wants to walk around thinking they're easy to manipulate.

And that's exactly why product branding works so well.

"I really like this brand, it's much higher quality." Sure it is. Have you actually blind-tested it against other brands to see for sure?

"I don't get trapped by all that branding and advertising stuff. I think for myself." No. That's your brain's ego-protection software kicking in. There are entire market segments designed specifically for independent thinkers like you.

"Look, I'm totally anti-consumerist. What I really care about is the environment." Guess what? There are brands for you too.

We talk often at Casual Kitchen how branding can mislead consumers into overpaying for products that don't deserve higher prices. Furthermore, branding is costly, and those extra costs are borne entirely by consumers--in the form of those same higher prices that we think make that brand worth it. It's incredibly circular logic that's incredibly profitable for the companies that sell branded products to us.

We all think we're immune to branding, but we're not. And we never will be.

And that's the key. Knowing you're not immune to branding actually empowers you as a consumer. It makes you more aware of the various forces acting on you when making a purchase.

And that makes you tougher to manipulate.

Read Next:
The Do-Nothing Brand
Where Going Generic Works... And Where It Doesn't
Ten Thoughts On the Value of Brands
Still Sixteen Ounces
Brand Disloyalty


* This post was first published on July 31, 2012.

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